Correlation Between Xtrackers Nikkei and Xtrackers LevDAX
Can any of the company-specific risk be diversified away by investing in both Xtrackers Nikkei and Xtrackers LevDAX at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Xtrackers Nikkei and Xtrackers LevDAX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers Nikkei 225 and Xtrackers LevDAX, you can compare the effects of market volatilities on Xtrackers Nikkei and Xtrackers LevDAX and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Xtrackers Nikkei with a short position of Xtrackers LevDAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Nikkei and Xtrackers LevDAX.
Diversification Opportunities for Xtrackers Nikkei and Xtrackers LevDAX
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and Xtrackers is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Nikkei 225 and Xtrackers LevDAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers LevDAX and Xtrackers Nikkei is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Xtrackers Nikkei 225 are associated (or correlated) with Xtrackers LevDAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers LevDAX has no effect on the direction of Xtrackers Nikkei i.e., Xtrackers Nikkei and Xtrackers LevDAX go up and down completely randomly.
Pair Corralation between Xtrackers Nikkei and Xtrackers LevDAX
Assuming the 90 days trading horizon Xtrackers Nikkei 225 is expected to generate 0.6 times more return on investment than Xtrackers LevDAX. However, Xtrackers Nikkei 225 is 1.68 times less risky than Xtrackers LevDAX. It trades about 0.08 of its potential returns per unit of risk. Xtrackers LevDAX is currently generating about -0.09 per unit of risk. If you would invest 2,366 in Xtrackers Nikkei 225 on August 24, 2024 and sell it today you would earn a total of 38.00 from holding Xtrackers Nikkei 225 or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers Nikkei 225 vs. Xtrackers LevDAX
Performance |
| Timeline |
| Xtrackers Nikkei 225 |
| Xtrackers LevDAX |
Xtrackers Nikkei and Xtrackers LevDAX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers Nikkei and Xtrackers LevDAX
The main advantage of trading using opposite Xtrackers Nikkei and Xtrackers LevDAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Nikkei position performs unexpectedly, Xtrackers LevDAX can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Xtrackers LevDAX will offset losses from the drop in Xtrackers LevDAX's long position.| Xtrackers Nikkei vs. UBS Fund Solutions | Xtrackers Nikkei vs. Xtrackers II | Xtrackers Nikkei vs. iShares VII PLC | Xtrackers Nikkei vs. SPDR Gold Shares |
| Xtrackers LevDAX vs. Xtrackers II Global | Xtrackers LevDAX vs. Xtrackers FTSE | Xtrackers LevDAX vs. Xtrackers SP 500 | Xtrackers LevDAX vs. Xtrackers MSCI |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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